German Economy Collapsing After Going ‘Green’

Written by Climate Discussion Nexus on November 29, 2024. Posted in Current News

The intergalactic delegates at COP29 are confronted with their collective inability to do what they say must be done, by them, right away

But it’s not just them. So don’t try again with a different cast; it’s the script that’s the problem.

Instead look at what just happened in Germany which was repeatedly cited as an important example due to its early adoption of a European Green New Deal, the fabled Energiewende.

Including by us, because contrary to the zealots we said it wasn’t working.

And now Olaf Scholz’s ex-coalition just proved that “Go Woke, Go Broke” isn’t just for Budweiser, Disney or other less famous firms any more. Works great even for G7 economies.

Now you may say governments can’t go broke. And (h/t Ian Lee of Carleton University) it is true that they cannot go bankrupt. Due to their coercive capacity to raid the public’s pockets, what states do instead is become insolvent.

Much better, right? You still get to meet their obligations.

That being said, Germany went pretty much insolvent and it couldn’t have happened in an uglier, more revealing or more satisfactory way. As Joseph C. Sternberg wrote in the Wall Street Journal, or at any rate his headline-writer wrote, “It all started with a 2023 court decision that made Berlin treat green policy like any other issue.”

What, you mean less than cosmically urgent? No. With honest accounting.

As Sternberg explained:

“Germany’s highest constitutional court ruled in November 2023 that the government’s climate spending must be paid for on the government balance sheet, rather than via off-balance-sheet borrowing as Berlin had intended.

At a stroke green subsidies became subject to Germany’s version of a balanced-budget amendment. Henceforth if the government wanted to fund the green transition, it would need to raise new revenue or find offsetting spending cuts elsewhere.”

Well gosh. Why not? Especially since we keep being told ‘renewables’ are now cheaper than conventional fuels, and what’s more they create so many dazzling, clean, soul-satisfying jobs that we’ll all live like the Jetsons but in Eden.

Uh um that is to say:

“The net effect of this ruling was to make climate change like any other political issue, which is to say one of fiscal trade-offs. Choosing between competing priorities is the essence of governing – at least if your country doesn’t issue the world’s reserve currency.

Mr. Scholz’s administration couldn’t survive this new political pressure because its constituent parts were singularly ill-suited to performing this task in concert.”

Well that and the unicorn power didn’t work. It’s kind of important to the story.

Now imagine you’re Burkina Faso. (We choose them because they are at COP29 and have cool scarves one of which we actually managed to snag as a souvenir.)

As you contemplate your budgetary and economic problems, you might very well say if only we had Germany’s instead.

With just 82 million people and despite a troubled 20^th century following a turbulent 19^th, difficult 18^th, horrendous 17^th and so forth, it has the 6^th-largest economy in the world (17^th in per capita GDP), and its entrepreneurs need only mention German engineering to get hushed respect rather than loud ridicule from potential customers. (Don’t try this with virtually any other country, from Algeria to Italy.)

Now suppose you’re Burkina Faso with 22 million people, 114^th in global GDP and 171^st if you’re measuring it per capita, and some high-falutin’ Western idealist or politician breezes in and says forget that silly old oil, gas and coal.

You should power your economy the way Germany does. That way you can have a crumbling industrial base, collapsing national finances and political chaos.

So ja, there is a ‘green’ transition. Straight down.

See more here climatediscussionnexus

Header image: Die Welt

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